Oil surges, stocks drop as Trump threatens to block Hormuz

Oil prices surged back above $100 a barrel and stocks fell Monday as investors awaited a looming US deadline on a blockade of the Strait of Hormuz, ratcheting up fears for Middle East energy supplies.

The resurgent geopolitical tensions come after ceasefire talks between Washington and Iran broke down over the weekend, dousing hopes for a lasting end to a war that has threatened economies worldwide.

Traders say the prospect of widespread inflation from spiking oil prices and supply disruptions has also put a focus on corporate earnings, with a range of blue chips this week starting to report first-quarter results.

On Friday, the US reported that its consumer price index climbed to 3.3 percent in March, the highest level since May last year.

“The stagflation word is being widely aired once again as geopolitical turmoil threatens to stymie international growth and stoke inflationary pressures,” said Russ Mould, investment director at AJ Bell.

Such concerns have increased with the United States set at 1400 GMT on Monday to begin a partial blockade of the Strait of Hormuz, through which one-fifth of the world’s oil and gas passes.

“The blockade will be enforced impartially against vessels of all nations entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman,” US Central Command posted on X.

The threat comes as Tehran has already effectively closed the Strait of Hormuz to oil and other traffic since the start of US-Israel strikes on Iran in late February.

World oil prices jumped around seven percent Monday, while stocks on Wall Street opened lower, in line with losses across Asia and Europe.

“Reopening the Strait of Hormuz remains the key requirement for reigniting a sustainable rally across risk assets,” said David Morrison, an analyst at Trade Nation.

“Yet there’s also a conviction, rightly or wrongly, that the war will end relatively soon,” he said, noting that oil futures contracts for deliveries later this year are currently priced well below current market prices.

“As far as oil traders are concerned, this war may be in its seventh week, but it should be resolved by summer,” Morrison said.

But Chancellor Friedrich Merz warned Monday that Germany, Europe’s biggest economy, would feel the effects of the energy shock from the war “for a long time to come, even after it is over”, as his government announced relief measures including a fuel-tax cut.

In Hungary, stocks rallied after conservative Peter Magyar won a thumping majority in parliamentary elections Sunday, ousting Prime Minister Viktor Orban after 16 years in power and opening the way to improved relations with the European Union. The BUX index in Budapest was up more than three percent.

Economists at ING said that alongside economic reforms, Hungary’s new pro-Europe government could set a target date for adopting the euro.

“If timed perfectly, this could boost market confidence and give the Tisza party more time to work on the Hungarian economy with some tailwinds,” they wrote in a research note.

– Key figures at 1340 GMT –

Brent North Sea Crude: UP 7.0 percent at $101.82 a barrel

West Texas Intermediate: UP 7.2 percent at $103.56 a barrel

New York – Dow Jones: DOWN 0.8 percent at 47,543.20 points

New York – S&P 500: DOWN 0.3 percent at 6,794.44

New York – Nasdaq Composite: DOWN 0.3 percent at 22,828.18

London – FTSE 100: DOWN 0.5 percent at 10,549.40

Paris – CAC 40: DOWN 0.8 percent at 8,194.07

Frankfurt – DAX: DOWN 1.0 percent at 23,572.32

Tokyo – Nikkei 225: DOWN 0.7 percent at 56,502.77 (close)

Hong Kong – Hang Seng Index: DOWN 0.9 percent at 25,660.85 (close)

Shanghai – Composite: UP 0.1 percent at 3,988.56 (close)

Euro/dollar: DOWN at $1.1702 from $1.1728 on Friday

Pound/dollar: DOWN at $1.3448 from $1.3463

Dollar/yen: UP at 159.73 yen from 159.19 yen

Euro/pound: DOWN at 87.00 pence from 87.11 pence

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